Lexmark International, Inc (NYSE: LXK) today announced record revenue and earnings per share for the third quarter of 2002 that included a 5% increase in revenue to $1.041 billion and earnings per share of 70c, up from 52c a year earlier, an increase of 33%.
As reported earlier this month, third-quarter earnings include an asset impairment write-off of $15.8 million, or 9c per share, related to the abandonment of a customer relationship management (CRM) software project. Excluding this write-off, earnings per share would have been 79c, up 50% from last year and exceeds the First Call consensus estimate of 78c.
"Our third-quarter earnings exceeded our original expectations," stated Paul J Curlander, chairman and CEO. "Overall, our results again demonstrate the stability of our supplies-driven business model that enables us to generate solid returns to stockholders, even in difficult economic times."
Financial highlights
* Laser and inkjet supplies revenue grows 19%.
* Lexmark`s revenue for the third quarter ended 30 September 2002 was $1.041 billion, up 5% from $996 million in the same period of 2001.
* Without the impact of foreign currency translation, revenue growth would have been 2% versus last year.
* Laser and inkjet supplies revenue was $568 million, a 19% increase over $476 million a year ago and now represents 55% of total revenue, up from 48% in the prior year and 53% in the prior quarter.
* Laser and inkjet printer revenue was $381 million, down 3% from $393 million in the third quarter of 2001.
* Gross profit margin was 32.5% for the quarter versus 30.3% a year ago due to an increase of supplies in the product mix and higher supplies margins.
* Operating expenses were $215 million, a growth rate of 7%. * Operating income was $124 million in the third quarter of 2002, 23% higher than the $101 million reported last year.
* Diluted net earnings per share for the period were 70c, an increase of 33% from a year ago.
* Excluding the asset impairment write-off, gross profit would have been $354 million or 34% percent of revenue, and operating income would have been $140 million or 38% higher than a year earlier.
* Lexmark`s debt-to-total-capital ratio at 30 September 2002 was 14%, unchanged from 30 June 2002. Net cash provided by operating activities in the third quarter was $183 million versus $7 million in the same period of 2001.
* Capital expenditures were $25 million in the third quarter with most spending for new product development and infrastructure support.
* Lexmark repurchased approximately 1.1 million shares of its common stock during the third quarter for $52 million, at prices ranging from $41.97 to $47.90 per share. During the first nine months of this year, the company repurchased 6.1 million shares of its common stock for $331 million, at prices ranging from $41.97 to $60.96. The company`s remaining share repurchase authorisation was $188 million as of 30 September 2002.
Other highlights
On 24 September 2002 Lexmark and Dell Computer Corporation announced that Lexmark will become Dell`s initial supplier for Dell-branded inkjet and laser printers and related aftermarket cartridges. No volumes have been set for this agreement.
Nine-month review
* Laser and inkjet supplies account for 53% of revenue.
* Revenue for the nine months ended 30 September 2002 was $3.149 billion, an increase of 6% versus $2.964 billion in the same period of 2001.
* Revenue from laser and inkjet supplies of $1.681 billion increased 18% from $1.428 billion a year ago. Laser and inkjet printer revenue of $1.176 billion grew 3% from $1.136 billion in the first nine months of 2001.
* Operating income was $351 million versus $341 million a year earlier.
* Net earnings for the period were $250 million, or $1.89 per share on a diluted basis, versus net earnings of $237 million, or $1.77 per share in the same period of 2001.
* Excluding the asset impairment write-off in the third quarter, operating income would have been $367 million, net earnings would have been $262 million, and earnings per share would have been $1.98.
Looking forward
"Looking forward to the fourth quarter of 2002, we believe that we are well-positioned for continued earnings growth," said Curlander.
"However, we remain cautious due to uncertain future information technology spending, a relatively weak consumer market, and aggressive competition. In the fourth quarter of 2002, we expect a year-over-year revenue growth rate in the low- to mid-single digits and earnings per share of 70c to 80c. This range exceeds the guidance we provided on 10 October 2002 by 3c."
The company reported earnings per share in the fourth quarter of 2001 of 46c on an operational basis, before non-recurring charges.
For further information, please contact Cathy Steyn at telephone (011) 329 0999; fax (011) 792 7449; e-mail cathryn.steyn@lexmark.co.za
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Lexmark International, Inc is a leading developer, manufacturer and supplier of printing solutions -- including laser and inkjet printers, associated supplies and services - for offices and homes in more than 150 countries. Founded in 1991, Lexmark reported more than $4.1 billion of revenue in 2001, and can be found on the Internet at www.lexmark.com.
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